Drop in orders for Metso

Metso has seen a drop in orders and net sales for the first quarter of 2015, but the Finnish-based company said its guidance issued in February remained unchanged.

It has reported that net sales increased by 7% in its services business area, which includes wear solutions, spare parts and performance services. Challenging market conditions, however, were said to have affected equipment, project and product orders.

Metso recently sold its Process Automation Systems (PAS) business to Valmet – formerly a part of Metso. The deal was agreed in January, 2015, and closed on April 1.

For the first quarter of this year, Metso said that orders received totalled €799 million, down from €875 million a year earlier. Of the 2015 figure, €542 were services orders, compared to €545 million in the same period last year.

Net sales were €787 million, compared to €817 million last year, of which €470 million were for the services segment – €438 million last year.

EBITA (earnings before interest, taxes and amortization) before non-recurring items was €70 million, or 8.9% of net sales. In the first quarter of last year, this was €88 million or 10.7% of net sales.

Metso said that it estimated that its net sales in 2015, excluding the Process Automation Systems business, would be between €3 billion and €3.3 billion and that its EBITA margin before non-recurring items would be around 13%.

President and CEO Matti Kähkönen said that the mining equipment market had weakened further at the beginning of this year, and revised investment plans in the oil and gas market had resulted in a softening of the project market for its valve business.

“The services business, however, grew in the first quarter and is helping to offset the headwind from the equipment and project business,” he said, adding that overall, Metso had been successful in maintaining healthy gross margins.

“Our performance was fairly stable in our core businesses. This gives us confidence in meeting our full-year guidance for 2015.”

Kähkönen said, “We expect the demand for mining equipment, products and projects to remain weak. Due to our large installed equipment base and our stronger services presence, we expect the demand for our mining services to remain good.

“The demand for aggregates equipment is expected to be satisfactory, while the demand for related services is expected to be good.”